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Congress Holds Hearing on SBIR/STTR Programs

September 12, 1997

The Small Business Innovation Research Program (SBIR) and the Small Business Technology Transfer Program (STTR) were the focus of a hearing before the Technology Subcommittee of the House Science Committee last week. The subcommittee is considering re-authorization of the STTR program.

Discussion focused on three issues: (1) the effectiveness of SBIR and STTR in meeting program goals; (2) the geographic distribution of SBIR/STTR awards; and (3) the need to balance commercialization objectives with funding research to meet agency needs.

Under STTR, authorized by the Small Business Research and Development Enhancement Act of 1992, federal agencies which have an extramural research and development budget in excess of $1 billion must designate for technology transfer a certain percentage of those budgets for small business. The program operates in a manner similar to SBIR but STTR projects must involve cooperative research by a small business and a non-profit research institution, i.e. a university, college, non-profit research center or government-owned and contractor-operated laboratory

Dan Hill, Assistant Administrator for Technology, U.S. Small Business Administration spoke in favor of the reauthorization. He cited numerous studies that have found that SBIR and STTR are meeting the objectives established by Congress including a recent study by Josh Lerner at Harvard that found that "SBIR awards appear to have had a positive and substantial long-run impact on the firms in regions with considerable venture capital activity. In particular, awardees appear to have grown substantially faster -- whether measured by sales or employment - than a matching set of firms."

Scott Walson, a doctoral candidate at Stanford University, took an opposing view. He reported on an econometric analysis he developed which found that the SBIR program had "no impact on firms' research activities."

The panelists were asked their opinion of a Senate proposal to set aside a share of SBIR funds for specific geographic areas where there is little participation in the program. The panelists urged that awards continue to be made on a competitive basis while acknowledging that additional outreach activities, including supporting state SBIR assistance efforts, might be desirable.

Ann Eskesen, President of Innovation Development Institute, argued the need to maintain SBIR's focus on meeting agency research needs. She expressed concern that the current emphasis on "commercialization" is moving the program away from supporting higher risk, longer term projects.

The subcommittee expects to mark up the STTR reauthorization bill shortly. Copies of testimony can be obtained from the Committee's homepage at http://www.house.gov/science/welcome.htm